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Longitudinal data were compared from samples of school‐leavers in Australia and Sweden. The data were collected at approximately the same time and comprised two waves. Wave 2 occurred 5 years after Wave 1. The study examined at‐school predictors of future employment status. It was anticipated that prediction would be better in Sweden, where the unemployment rate was low, than in Australia, where the unemployment rate was high. The hypothesis was not supported. Two possible explanations for this were considered: (1) the different attrition rates in the two samples; (2) the fact that the local unemployment rates in the areas of study at the time, Luleå, northern Sweden and Adelaide, South Australia were actually very similar, despite big differences in the national rates. Attrition analyses on the Australian sample revealed that, despite the fact that unemployed school‐leavers were more likely to drop out, the dropouts and stayers did not differ significantly on any of the pretest measures or demographic variables, apart from socioeconomic status (low SES respondents were more likely to drop out). Consequently the latter explanation was felt to be more plausible and it is proposed that future research designed to test the hypothesis should compare different regions within the same country where unemployment rates vary substantially. The best predictors of future employment status in both countries were the academic variables: teacher‐rated academic potential and stated intention to continue with further study after completing compulsory schooling.